Selling Off The Plan vs Selling on Completion

[JCM]

Hi Everyone,

Just thought I would get Somersofters opinions and experiences on selling OTP vs On Completion. Advantages and disadvantages.

I am in the process of purchasing a development site and am trying to work out which method would get the better return. I have always been under the understanding that OTP sales are usually purchased by Investors as they are only concerned with numbers and Completed Sites are more likely to be purchased by Mums & Dads etc, who like to see, feel, and know exactly what they are getting.
I have also always been under the understanding that Completed sites usually fetch higher prices as emotions are involved.

Appreciate your Input!
Regards
John

 

[Fudge]

Don't know John.....


But all I would add is that dependent on the size of your development, you may need some OTP slaes to finance your project??

F

 

[vaughan]

Hi Everyone,

Just thought I would get Somersofters opinions and experiences on selling OTP vs On Completion. Advantages and disadvantages.

I am in the process of purchasing a development site and am trying to work out which method would get the better return. I have always been under the understanding that OTP sales are usually purchased by Investors as they are only concerned with numbers and Completed Sites are more likely to be purchased by Mums & Dads etc, who like to see, feel, and know exactly what they are getting.
I have also always been under the understanding that Completed sites usually fetch higher prices as emotions are involved.

Appreciate your Input!
Regards
John

OTP shifts a lot of the risks to the buyer: the developer need not worry about future market values, for instance, since the properties have already been sold and what happens in 2 years time at completion is the buyers problem.

There was a post here recently where the property values actually went UP during the building period, so the developer slowed down and used the "not finished in 2 years" clause to cancel the sales and put them back on market at a higher price.

I don't know whether your assumption about OTP buyers being investors is correct. In my experience the numbers for OTP don't make any investment sense at all.

 

[Aaron_C]

OTP is best for a developer because it is usually a pre-requisite for any bank funding. It can be beneficial for the buyer because they get a new product with only putting down a 10% deposit.

However, as has been identified, OTP sales are always in favour of the developer. Although it is rare for a developer to cancel contracts just because prices have gone up. It's not worth the risk I think unless we're talking huge differences.